that type of thing, which make credit. We estimate some of the increases in prices are paid for by them and not by ECA.

Mr. WIGGLESWORTH. How would you arrive at that figure?

Mr. KINDLEBERGER. That figure is derived by taking such part of the price increase as applies to the commodities above in that column. Mr. WIGGLESWORTH. And it is just prorated?

Mr. KINDLEBERGER. Yes, sir.

The CHAIRMAN. Now, that is on a 15 months' basis?

Mr. KINDLEBERGER. Yes, sir.

The CHAIRMAN. And the figure $289,000,000 net carried in there is an 80 percent figure rather than any appraisement?

Mr. KINDLEBERGER. Yes, sir.

EXPORTS OF PARTICIPATING COUNTRIES

The CHAIRMAN. Now, is there any place in here where the over-all exports of the participating countries to the Western Hemisphere appear?

Mr. KINDLEBERGER. Yes, sir.

The CHAIRMAN. Where?

Mr. KINDLEBERGER. If you look at the balance of payments book they appear for the fiscal year 1948-49 on page 11. The first three columns relate to the United States, Canada and other Western Hemisphere countries. They further can be derived for the fiscal year, but I am afraid I do not have the figures handy, by deducting items 50, 51, 53, and 54 from the totals.

Mr. NITZE. On page 5 we find the anticipated exports by commodities.

The CHAIRMAN. On page 5 of this same volume?
Mr. NITZE. Yes, sir.

The CHAIRMAN. On page 5 of this same volume?

Mr. NITZE. Yes, sir. There you find a break-down by commodities of anticipated exports over the 15 months' period.

Mr. KINDLEBERGER. But unfortunately the total has to be derived by subtracting the last four items from the total.

Mr. NITZE. And on page 9 you find comparable figures for the fiscal year 1948-49.

Mr. KINDLEBERGER. Mr. Chairman, we have been given to understand that you are interested in having a justification for the total exports of these countries, and I have a statement prepared on that in case you are interested in having it.

The CHAIRMAN. I am interested in that, yes. In what shape is it? Mr. KINDLEBERGER. I have an apology to make because most of my material got locked up in some office safe, and I have only two copies which I salvaged from the central files. I can talk from one and allow one of them for the committee. I am apologetic that I do not have the full set of them here.

The CHAIRMAN. Well, if you are going to read it, all right.

Mr. KINDLEBERGER. I do not propose to read it. I was proposing to discuss it. I have simply two copies of it here.

The first page is followed by three tables, and I believe the first table is the one in which you are interested, comparing the total exports of these countries for 1938, 1946, 1947 and 1948-49.

The CHAIRMAN. You can put this table into the record.
Mr. KINDLEBERGER. Yes, sir.

The CHAIRMAN. With the explanation of what their total over-all exports will be.

(The matter referred to is as follows:)

JUSTIFICATION OF PARTICIPATING COUNTRIES ESTIMATED EXPORTS

Table I attached gives figures in current dollars for total exports of the participating countries for 1938, 1946, and 1947 as compared with estimated total exports for 1948-49 at July 1, 1947, prices set forth in column 19 on page 11 of "Estimated balance of payments on current account of the participating countries" (brown book). The figures include exports by mother countries to their own dependent overseas territories and by the overseas territories to their mother countries, despite the fact that these transactions rarely require the use of foreign exchange.

It will be observed that estimated exports for 1948-49 at 18,119.7 million dollars are some 24 percent higher than 1947 calendar year exports. 1947 exports at $14,788,000,000 were in turn some 45 percent higher than exports for 1946, the first postwar year, recorded at $10,234,000,000.

Comparison with 1948 in value terms is seriously distorted because of the large increase in prices. On this account table II sets forth for certain countries volume indexes of exports based on 1938 as 100 for 1946 and 9 months of 1947 by quarters, together with a rough index for 1948-49. For those countries where no detailed price indexes for exports were available, a broad indication of the volume of exports has been obtained for 1946, 1947, and the fiscal year 1948-49 through the use of the average level of measured export prices for all continental Europe.

Total exports for France show only a small increase from $1,330,000,000 in 1947 to 1,414.7 million dollars as estimated for 1948-49. This increase is believed to understate the actual increase likely to be achieved since exports to other participating countries for 1948-49 are probably understated by some $100,000,000 or more. This understatement, it should be noted, does not affect the deficit of France with the Western Hemisphere. As shown in table III, French exports to the Western Hemisphere are expected to rise from $170,000,000 in 1947 to $224,000,000 in 1948-49 or by 32 percent.

Source: 1946 and 1947 figures for which quarterly break-down is given from ECE. value figures and ECE average values for continental Europe.

TABLE III.-French exports broken down by areas

Others derived from

The CHAIRMAN. Now, there is some kind of a break-down of that on page 5 of this brown book, is there not of these commodities? Mr. KINDLEBERGER. Yes, sir; all commodities, except that the category of miscellaneous commodities in exports amounts to 45 percent of the total.

The CHAIRMAN. So that there is not much of a break-down after all.

Mr. KINDLEBERGER. There is only a partial break-down; yes, sir.

DISCUSSION OF DOLLAR EARNINGS OF PARTICIPATING COUNTRIES

Mr. WIGGLESWORTH. In the over-all table on page D-6 of the justifications, the column 2 figure shows the estimated dollar earnings of each one of these participating countries. Is this the story you are going to give us, the justification of those figures in that column 2? Mr. KINDLEBERGER. Mr. Nitze has a reconciliation of the exports with those dollar earnings in column 2.

Mr. WIGGLESWORTH. Offhand the figures in this table do not seem to relate to those.

Mr. KINDLEBERGER. No, the figures in this table I have just given you are for 1948-49.

Mr. WIGGLESWORTH. It is a 12 months' table?

Mr. KINDLEBERGER. Yes; it has to be to make the comparison valid for 1947, 1946, and 1938. This is about all there is in summary on the Western Hemisphere, and this checks with the table on page 11.

Mr. WIGGLESWORTH. What I personally would like to get before I get through is a justification for the figures appearing in column 2 in order that the committee and the Congress may be satisfied that there has been allowed in full what it may be anticipated each country can produce in dollar earnings.

Mr. NITZE. May I comment on that, Mr. Wigglesworth?
Mr. WIGGLESWORTH. Yes.

Mr. NITZE. The figure that appears on page D-5 of the justification manual, 4,468.5 million dollars is derived in the following way: The exports to the Western Hemisphere appearing on page 5 of the Balance of Payments Manual are in July 1, 1947, prices and total $3,840,400,000.

Mr. WIGGLESWORTH. Off the record.

(Discussion off the record.)

Mr. NITZE. The total commodity exports during the 15-month period which are listed on page 5 of the Balance of Payments Manual total $3,840,400,000.

Mr. WIGGLESWORTH. $3,840,400,000?

Mr. NITZE. That is right.

When the price adjustment with respect to those exports is taken into account it increases the figure to $4,032,500,000. Added thereto were the net invisible earnings of those countries having net earnings which total $450,100,000. I can give you a break-down of those countries which have net earnings on invisible account, which include Iceland, $800,000; Ireland, $29,000,000; Norway, $47,900,000; Portugal and dependencies, $16,900,000; Sweden, $48,500,000; Switzerland, $284,400,000; and United Kingdom and dependencies, $22,600,000. Mr. WIGGLESWORTH. And that total is supposed to make upMr. NITZE (interposing). No, sir; not quite yet. There was also included with respect to Portugal an item of $100,700,000 which was the amount of reduction in their own gold and dollar assets which would be necessary to finance their payments without any outside assistance. Their gold and dollar assets are sufficient so that it was anticipated that they could meet their deficit out of their own gold and dollar holdings so that that $100,000,000 was added; and there was subtracted $114,800,000 on account of Switzerland, because Switzerland has a favorable over-all position and, therefore, not all of her dollar earnings would be required to finance imports from the Western Hemisphere.

If one totals the $4,032,500,000, the $450,100,000 of net earnings on invisible account of the countries I have listed, and the $100,700,000 of estimated Portuguese draw-down, one gets a total of $4,583,300,000. The CHAIRMAN. Do you have a table like that that you can give us? Mr. NITZE. I am sorry, sir; I have only one copy.

The CHAIRMAN. It is $4,000,000,000 and what?

Mr. NITZE. $4,583,300,000.

Mr. WIGGLESWORTH. From which is deducted $114,000,000?

Mr. NITZE. $114,800,000, which leaves $4,468,500,000, which is the total appearing at the bottom of column 2 on page D-5.

The CHAIRMAN. You might put that table in the record at this point if you will. Do you have it so that you can?

Mr. NITZE. Yes, sir.

(The matter referred to is as follows:)

Deriviation of total dollar earnings in ERP estimates April 1, 1948–June 30, 1949

[Millions of dollars]

Total..

4, 468. 5

Total commodity exports of participating countries (July 1, 1947, prices)

3, 840. 4

Total commodity exports of participating countries (current prices).
Net invisible earnings of certain countries 1.
Portuguese draw-down of assets.

Total

Less Swiss excess over its own needs assumed to be used as credits to other participating countries and included in column 3..

4, 032. 5

450. 1

100. 7

4, 583. 3

114. 8

The CHAIRMAN. You might go ahead and explain these tables a little if you will.

DISCUSSION OF VOLUME OF EXPORTS AND EARNINGS OF PARTICIPATING COUNTRIES, 1938 TO 1946-47

Mr. KINDLEBERGER. All right. The figures are in millions of current dollars and fail to show the movement in volume since prices have risen substantially in 1946 and 1947 compared with 1938. I have attempted to show the volume figures for certain countries in the following table, table 2.

The CHAIRMAN. But you do not show what that means; is it milmillions of dollars?

Mr. KINDLEBERGER. No, sir; these are index numbers, with 1998 equal to 100.

The CHAIRMAN. It is an index?

Mr. KINDLEBERGER. Yes, sir; with 1938 equal to 100. It shows Austria, for example, for 1946 with exports of only 4 percent of 1938 in volume.

The CHAIRMAN. Put up at the top that this table is an index only, because with all of these other things in it if anybody should turn to it quickly they would not be able to get that.

Mr. KINDLEBERGER. We might put, "Indexes of volume."

The CHAIRMAN. Yes; indexes of volume.

Mr. KINDLEBERGER. And 1938 equals 100.

The CHAIRMAN. Yes.

Mr. KINDLEBERGER. This shows for 1948-49, sir, that Austria will reach only 38 percent of its 1938 volume of exports and Britain, for example, is expected to reach 137 percent.